The second most common reasons businesses fail is lack of funding. According to data from CB Insights, 29 percent of startups failed because they ran out of money. Second to lack of market need. Is your business on the edge of becoming a statistic? You needn’t let it, since there is a variety of ways to net the personal financing you need to expand your business.
Funding can certainly be tricky. You don’t want to borrow too much, or get stuck with high interest rates coupled with an unfavorable payment schedule. Thinking of going the business credit route? Think again, unless you have accumulated capital. Where to turn? Personal loans. This funding option to expand your business is easy to apply for and receive.
What Is A Personal Loan Exactly?
Personal loans are unsecured with amounts ranging in the thousands, up to $100,000. You can use a personal loan to make business purchases or consolidate business debt. One of the enticing aspects is the fixed interest rate.
Personal loans are also accessible to nearly any business owner. They can be better than spending countless weeks, sometimes months, going through the traditional bank loan process.
“Your ability to qualify for a personal loan can have a major impact on a variety of needs,” Partners Financial Federal Credit Union explained. “It’s much better to know ahead of time than to be surprised in a high-pressure setting like a bank.”
This type of loan has become more popular for several reasons:
- There are more online lending platforms. Fintech companies are popping up everywhere, leading to higher availability and resources for personal loans.
- There’s more innovative technology. The rise in innovative technology has made money more accessible to people looking for a loan. You can fill out an online form and receive money in days.
- Increased accessibility without demographic obstacles. If a business owner needed a personal loan in the past, they were pretty much stuck with the local bank and the traditional loan application process. Not anymore.
Let’s dive a bit deeper and explore the options available for using your personal loan to expand your business.
Using A Personal Loan To Expand Your Business
One benefit of getting a personal loan is that you can use it for a multitude of things in order to expand your business. This is what sets this financing option apart from traditional bank loans or small business loans. Here are three ways to expand using a personal loan.
- Increase Inventory To Scale Sales and Profits
If you have reached a period in your business when you can’t seem to keep product on the shelf, it is definitely time to expand. This is certainly a great problem to have, especially if you have the cash flow to increase your inventory to meet consumer demand for your products.
However, inventory can be costly. From manufacturing to shipping, you need a good sum of money to expand your business’ inventory to the next level. A personal loan can make this happen. You may even be able to capitalize on bulk order discounts with more fluid cash on hand.
“Many business owners can take advantages of lower wholesale costs when they buy larger quantities of units,” Kimberlee Leonard of Chron noted. “This makes sense for regular items that the business knows will sell, because the business is confident it will move product effectively and not be left with it.”
- Boost Operations With More Equipment
Having equipment to arm your team properly is important. For example, if you looking to expand your landscaping business, you may need to hire another truck crew to handle new client accounts.
This means you will need to purchase a truck, trailer, and all the necessary equipment to get the job done efficiently. A personal loan can help you hire that team and put the equipment in their hands for more profits.
If you are a manufacturer, you may need to upgrade your current equipment to streamline operations on the facility floor, or bring in new technology to keep pace with competitors. This is another call to action to have a personal loan at the ready to expand your business.
- Increase Marketing Spend To Net More Clients
With more equipment and/or inventory, you will need to amp up marketing efforts to net new clients. Marketing is certainly not cheap, but necessary to expand any business. One of the most unique benefits of a personal loan is that you can use it to increase the marketing budget.
Maybe you want to dedicate a large portion of your marketing budget to Google AdWords, capitalizing on the keywords your clients are searching for. With a bigger budget, they’ll see your business ad at the top of Google search results, above your competitors.
Ready To Expand Your Business?
A personal loan has many advantages, especially if you don’t need that much funding to expand your business the way you envision. You can even use the cash for a combination of the above three, making the most out of the loan and fixed interest rates.
